Cryptocurrency Market Stabilizes Following 12-Month Low as Ripple, Cardano Lead Tepid Recovery
After hitting its lowest level of the year, the cryptocurrency market staged a modest recovery on Thursday with Ripple XRP and Cardano leading a narrow contingency of gainers. However, downside risks are still present following the breakdown of key supports for bitcoin and other major assets.
Altcoins, Tokens Lose Market Share
The combined value of all cryptocurrencies in circulation reached a low of $219.3 billion on Thursday, the lowest in 12 months. The market has since bounced back to the $230.5 billion range with most majors trading flat-to-slightly positive.
Cardano’s ADA token was the biggest gainer percentage-wise, rising 5.3% to $0.125.
Ripple’s XRP currency edged up 2.6% to $0.351. Stellar Lumens also rose 3.1% to $0.217.
According to the latest available data, digital currencies not named bitcoin accounted for just 51.1% of the total market capitalization, the lowest since December. Bitcoin’s share, meanwhile, has skyrocketed nearly 14 percentage points in three months. This means more investors are disavowing altcoins and tokens in favor of bitcoin.
Fundstrat’s Tom Lee said as much in his recent appearance on CNBC, where he described bitcoin as “the best house in a tough market.” At the moment, the crypto market’s prospects are increasingly tied to bitcoin. Bitcoin and altcoins enjoyed a decoupling at the height of the market’s rally in January.
Total trade volumes were buoyant, based on averages observed over the last three months. Total market turnover reached $14.4 billion on Thursday, according to CoinMarketCap.
Dan Morehead, founder of the first U.S. cryptocurrency hedge fund Pantera Capital, took to CNBC Wednesday to urge investors not to overreact to price movements or news headlines involving digital assets.
“The main thing to remember is that bitcoin is very early-stage venture, but has real-time price feed — and that’s a unique thing. People get excited about the price and overreact,” said Morehead, whose hedge fund has returned more than 10,000% over its lifetime.
The cryptocurrency market cap shed some $35 billion on Wednesday after the U.S. Securities and Exchange Commission (SEC) announced it was delaying a ruling on a highly-anticipated bitcoin exchange-traded fund. The market’s reaction was somewhat surprising given that the regulator has not rejected the application.
Morehead, like others in the industry, believe that a bitcoin ETF is still a long ways off.
“I still think it will be quite a long time until an ETF is approved. The last asset class to be approved for ETF certification was copper, and copper has been on earth for 10,000 years. The ETF rejection is the same story we’ve had for five years. The SEC has been very cautious with an ETF.”
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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